|Time To Park Duke Energy's Aircraft?|
"I've talked to our security folks about the security involved in my new role. Over the last 20 years I've flown back and forth to my district on commercial aircraft and will continue to do that."
Duke Energy sees things differently. The 8-K on file with the Securities and Exchange Commission discloses that the Charlotte, N.C.-based gas and electricity utility is worried about security for its CEO James E. Rogers. Here's what it says:
"For security reasons, Mr. Rogers is required by the Company to use the Company's aircraft, whenever feasible, for his business travel. Mr. Rogers is also permitted to use the Company's aircraft for personal travel within North America; however, Mr. Rogers will be required to pay for the cost of personal travel on the Company's aircraft in accordance with the Company's policies, except he is not required to pay for the cost of travel to his annual examination or to meetings of the board of directors to other companies on whose board Mr. Rogers serves. Mr. Rogers is responsible for any income taxes resulting from such aircraft usage. However, to the extent Mr. Rogers incurs expenses associated with his spouse accompanying him on business travel, Mr. Rogers is entitled to reimbursement for those expenses, including payment of a tax gross-up."
The proxy statement includes details that show Rogers got $363,573 in 2009 in "other compensation" for personal use of Duke Energy's aircraft. [The 2010 data isn't out yet.] That other compensation comes from the IRS determining that the trips are imputed income. Imputed income isn't cash, it's often a benefit that isn't paid in cash. A footnote on page 71 of Duke's proxy statement says: "Officers are permitted to invite their spouse or other guests to accompany them on business trips when space is available; however, in such events the officer is impute income in accordance with IRS guidelines. The additional cost . . . is the amount of the IRS-specified tax deduction disallowance, if any, plus any additional carbon credits purchases with respect to the executive officers personal travel."
Meanwhile, Janine Migden-Ostrander, Ohio's consumers counsel, has noted that Duke's residential electric rates are about the highest in the state. She said the company should refund some of the proceeds from the $40 million tax battle -- but only if Duke succeeds. Rogers use of the plane, so far, has not been a public issue. Here's Midgen-Ostrander on Duke's rates for consumers:
"If Duke Energy presses forward to reduce its property taxes paid to schools and local governments, the utility should be required to refund to customers any portion of the taxes that are currently included in its rates. My office - as the residential utility consumer advocate - will take appropriate measures to argue that these refunds occur. At this time, Duke's residential electric rates are among the highest in the state, surpassing those high rates paid in northern Ohio. With residential consumers continuing to struggle and stretch their budgets, a break for customers is only fair if Duke should persist with its plan to reduce its property taxes."